Treadway v. Commissioner

LONNIE CHARLES TREADWAY AND PATSY H. TREADWAY, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Treadway v. Commissioner Docket No. 12533-79. United States Tax Court T.C. Memo 1984-153; 1984 Tax Ct. Memo LEXIS 519; 47 T.C.M. (CCH) 1375; T.C.M. (RIA) 84153; March 28, 1984. Charles E. Craze*520 and Brian Thompson, for the petitioners. Kathleen L. Midian, for the respondent. HAMBLEN MEMORANDUM FINDINGS OF FACT AND OPINION HAMBLEN, Judge: Respondent determined a deficiency in the amount of $604.35 in petitioners' 1976 individual Federal income tax. The sole issue for determination is whether petitioners are liable for self-employment tax under section 1401 1 with respect to income received for services as an ordained minister. Some of the facts have been stipulated and are found accordingly. The stipulation of facts and attached exhibits are incorporated herein by this reference. Petitioners Lonnie Charles Treadway and Patsy H. Treadway 2 resided in Beaumont, Texas, when they filed their joint Federal 1976 income tax return with the Internal Revenue Service Center at Austin, Texas, and when they filed their petition in this case. In 1967, petitioner was ordained by the United Pentecostal Church. Based on his religious beliefs and principles, petitioner conscientiously objects*521 both to the payment of self-employment taxes and to accepting benefits from the Social Security system. Petitioner claims he is exempt from these taxes because he timely filed and attached to his 1968 Federal income tax return Form 4361, Application for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, requesting exemption from the tax. He argues that, in any event, application of such tax to him would be unconstitutional. In 1969, in relation to his 1968 income taxes, petitioner filled out a Form 4361, requesting an exemption from self-employment. Petitioner gave the signed form to his CPA, who did not testify at trial. The Internal Revenue Service has no record that the Form 4361 was ever filed and his 1968 return was destroyed. On his 1976 Federal income tax return, petitioner did not report any self-employment tax. In his notice of deficiency, respondent determined that petitioner was liable for self-employment tax under section 1401. 3 *522 In section 1402(e)(1), an exemption to the general rule of section 1401 is provided for ministers, which is limited by a timely filing requirement. 4 When a Form 4361 is filed requesting an exemption under the statute, it is retained by the Internal Revenue Service Center in a permanent alphabetical file. Internal Revenue Manual, Records Administration par. 110(5)77, and Correspondence par. 35(44)(36)(9)(b)(6). If the Form 4361 is attached to a return when received by the Internal Revenue Service, the form is detached from the return for processing. Internal Revenue Manual, Correspondence par. 35(44)(36)(2)(b). *523 Petitioner bears the burden of proof in showing that his Form 4361 was timely filed, and that the respondent's determination is erroneous. Welch v. Helvering,290 U.S. 111 (1933); Rule 142(a), Tax Court Rules of Practice and Procedure. The Form 4361 completed by petitioner was given to his CPA, and petitioner did not show the form was ever filed with the Internal Revenue Service. The statute and the regulations clearly establish that the time limitations of section 1402(e) are mandatory and must be strictly complied with. 5 Because a search of their records by the respondent for petitioner's Form 4361 failed to discover the form and since petitioner failed to carry his burden of proof to show the form was filed, we find that petitioner did not timely file a request for exemption as required by section 1402(e). Petitioner also attempts to refute his liability for self-employment tax by attacking the constitutionality of applying to him the provisions of sections 1401 and 1402. However, the constitutionality of the self-employment tax is well established. Cain v. United States,211 F.2d 375 (5th Cir. 1954),*524 cert. denied, 347 U.S. 1013 (1954); Palmer v. Commissioner,52 T.C. 310 (1969). In United States v. Lee,455 U.S. 252, 258-259 (1982), the Supreme Court held that FICA taxes did not violate First Amendment rights, finding that the governmental interest "in assuring mandatory and continuous participation in and contribution to the social security system is very high." As the Court stated in Braunfeld v. Brown,366 U.S. 599, 606 (1961): To strike down, without the most critical scrutiny, legislation which imposes only an indirect burden on the exercise of religion, i.e., legislation which does not make unlawful the religious practice itself, would radically restrict the operating latitude of the legislature. * * * Following the tests in Lee and Braunfeld, the court in Olsen v. Commissioner,709 F.2d 278, 282 (4th Cir. 1983), affg. a Memorandum Opinion of this Court, found the interference with First Amendment rights occasioned by the self-employment tax "is justified by the government's need both for revenues to support current social security benefits and its need for administrative certainty*525 in determining who are members of the system both for determining revenues and benefits." 6 Moreover, taxpayers who object to receiving benefits are not forced to take them, since affirmative action is required, including the filing of an application. Palmer v. Commissioner,supra at 313. As noted in Olsen,supra at 282, "[t]axpayers generally are not permitted to avoid payment of a tax when their objections concern the manner in which government revenues are expended." Section 1402(g), providing an exemption for members of certain religious faiths, has a more flexible limitation than that in section 1402(e), providing a "second chance" to apply for exemption.7 It is well settled that the "second chance" to apply for an exemption from self-employment tax provided for members of certain religious groups in section 1402(g)(2) does not violate the Fifth Amendment due process rights of taxpayers*526 not afforded this opportunity. Jaggard v. Commissioner,582 F.2d 1189 (8th Cir. 1978), cert. denied, 440 U.S. 913 (1979); Olsen,supra at 283. In Ward v. Commissioner,608 F.2d 599, 602 (5th Cir. 1979), cert. denied, 446 U.S. 918 (1980), it was held that " § 1402(g) does not arbitrarily discriminate against Taxpayer. * * * The singling out of one class for tax exemption is justifiable in light of the Congressional purpose of accommodating the religious beliefs of those people whom they felt sure had firmly based religious convictions." See also, Henson v. Commissioner,66 T.C. 835, 838-839 (1976). *527 Petitioner's tired arguments as to constitutionality are a waste of this Court's resources. This Court has recently considered the constitutional arguments made herein by petitioner, 8 and it is clearly established that the self-employment tax provisions are constitutional as applied to petitioner. Through his own negligence, petitioner failed to timely comply with the requirements for obtaining an exemption from tax. The resulting denial of petitioner's exemption from tax was proper and constitutional. The denial did not violate petitioner's First or Fifth Amendment rights. We have considered petitioner's other arguments and find them unpersuasive. In conclusion, we hold that petitioners are liable for self-employment tax under section 1401. To reflect the foregoing, Decision will be entered for the respondent. Footnotes 1. Unless otherwise indicated, all section references are to the Internal Revenue Code of 1954, as amended and in effect during the taxable year in issue.↩ 2. "Petitioner" in the singular form hereinafter refers to petitioner Lonnie Charles Treadway.↩ 3. Sec. 1401 provides in relevant part: (a) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE.--In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax * * *.↩ 4. Sec. 1402(e) provides in part: (e) MINISTERS, MEMBERS OF RELIGIOUS ORDERS, AND CHRISTIAN SCIENCE PRACTITIONERS.-- (1) EXEMPTION.--Any individual who is (A) a duly ordained, commissioned, or licensed minister of a church or a member of a religious order (other than a member of a religious order who has taken a vow of poverty as a member of such order) or (B) a Christian Science practitioner, upon filing an application (in such form and manner, and with such official, as may be prescribed by regulations made under this chapter) together with a statement that either he is conscientiously opposed to, or because of religious principles he is opposed to, the acceptance (with respect to services performed by him as such minister, member, or practitioner) of any public insurance which makes payments in the event of death, disability, old age, or retirement or makes payments toward the cost of, or provides services for, medical care (including the benefits of any insurance system established by the Social Security Act), shall receive an exemption from the tax imposed by this chapter with respect to services performed by him as such minister, member, or practitioner. Notwithstanding the preceding sentence, an exemption may not be granted to an individual under this subsection if he had filed an effective waiver certificate under this section as it was in effect before its amendment in 1967. (2) TIME FOR FILING APPLICATION.--Any individual who desires to file an application pursuant to paragraph (1) must file such application on or before whichever of the following dates is later: (A) the due date of the return (including any extension thereof) for the second taxable year for which he has net earnings from self-employment (computed without regard to subsections (c)(4) and (c)(5)) of $400 or more, any part of which was derived from the performance of service described in subsection (c)(4) or (c)(5); or (B) the due date of the return (including any extension thereof) for his second taxable year ending after 1967.↩ 5. Allinson v. Commissioner,T.C. Memo. 1979-405↩. 6. Mangrum v. Commissioner,T.C. Memo. 1984-126; Hatcher v. Commissioner,T.C. Memo. 1978-59, affd. per curiam, 688 F.2d 82 (10th Cir. 1979), cert. denied, 444 U.S. 1084↩ (1980). 7. Sec. 1402(g) provides in pertinent part: (g) MEMBERS OF CERTAIN RELIGIOUS FAITHS.-- (1) EXEMPTION.--Any individual may file an application (in such form and manner, and with such official, as may be prescribed by regulations under this chapter) for an exemption from the tax imposed by this chapter if he is a member of a recognized religious sect or division thereof and is an adherent of established tenets or teachings of such sect or division by reason of which he is conscientiously opposed to acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, or retirement or makes payments toward the cost of, or provides services for, medical care (including the benefits of any insurance system established by the Social Security Act). Such exemption may be granted only if the application contains or is accompanied by-- (A) such evidence of such individual's membership in, and adherence to the tenets or teachings of, the sect or division thereof as the Secretary may require for purposes of determining such individual's compliance with the preceding sentence, and (B) his waiver of all benefits and other payments under titles II and XVIII of the Social Security Act on the basis of his wages and self-employment income as well as all such benefits and other payments to him on the basis of the wages and self-employment income of any other person, and only if the Secretary of Health, Education, and Welfare finds that-- (C) such sect or division thereof has the established tenets or teachings referred to in the preceding sentence, (D) it is the practice, and has been for a period of time which he deems to be substantial, for members of such sect or division thereof to make provision for their dependent members which in his judgment is reasonable in view of their general level of living, and (E) such sect or division thereof has been in existence at all times since December 31, 1950. An exemption may not be granted to any individual if any benefit or other payment referred to in subparagraph (B) became payable (or, but for section 203 or 222(b) of the Social Security Act, would have become payable) at or before the time of the filing of such waiver. (2) TIME FOR FILING APPLICATION.--For purposes of this subsection, an application must be filed on or before the time prescribed for filing the return (including any extension thereof) for the first taxable year for which the individual has self-employment income (determined without regard to this subsection or subsection (c)(6)), except that an application filed after such date but on or before the last day of the third calendar month following the calendar month in which the taxpayer is first notified in writing by the Secretary that a timely application for an exemption from the tax imposed by this chapter has not been filed by him shall be deemed to be filed timely.↩ 8. Mangrum v. Commissioner,supra.↩